A report from the Miami Herald in Florida. “Moving trucks may be parked near Virgin MiamiCentral soon. Park-line Miami at 100 NW Sixth St., the two 30-story apartment buildings for rent above the train station, opened its leasing office in mid-January. Najam Syed, head of asset management at Brightline said his team is hopeful that it will soon be leasing the 816 luxury units. The smallest unit, a 630-square-foot studio and bathroom, will lease at $1,900 per month. The largest unit, a 2,865-square-foot three-bedroom, three-bath apartment, will lease at $4,200 per month. Pricing is based on the market average in Edgewater and the medical district, Syed said.”
“‘With new supply coming on board [in the area], we expect rent to be stable for the next two to three years,’ Syed said. Other luxury residential projects are planned for the area. ‘Florida has always been plagued by an oversupply problem,’ Syed said.”
The Real Deal on New York. “Luxury contract signings in Manhattan were up last week, but it’s a little too early to celebrate. Fifteen contracts above $4 million were signed between January 13 and 19, according to the Olshan Luxury Market Report. That was four more than the previous week, but signings overall have been sluggish in 2020, with the first two weeks of January marking the worst start to the year in seven years.”
“The figures suggest a continuation of 2019, with little evidence of recovery in the luxury market. ‘At this point, we have 34 contracts signed [in 2020], and last year we had 37,’ said Donna Olshan. ‘It’s not that much different.’ (In 2017, there were 68 luxury contract signings in the same time period.)”
“The priciest contract was unit 50C at the Christian de Portzamparc–designed 157 West 57th Street. It was listed for $21 million in October 2018 and went into contract with an asking price of $16.5 million. The seller initially paid $19.35 million when they bought it in April 2015. The trend is noticeable across the pool of 15 properties, 11 of which had price reductions. The average price discount between first and final asking price was 17%, the report showed.”
“The four properties asking above $10 million were hit the hardest, with an average price reduction of 28 percent and an average of 626 days on the market. ‘The higher you go in price, the greater degree in difficulty and the much longer marketing demand,’ Olshan said. The average number of days on the market for all the properties was 591.”
The Pikes Peak Courier on Colorado. “Occasionally a property is listed with a price that is perceived as overpriced for the market. As a result, it may sit on the market longer than surrounding similar properties. The seller gets nervous the property hasn’t sold and instructs his broker to lower the price again and again but still no contract materializes. Is this a stigmatized property or just coincidence that it’s not selling?”
“We can’t make a blanket statement for every property that sees a price reduction as a stigmatized property because changes in the market or condition of a property sometimes necessitate a price reduction. However, in a situation that a property was clearly overpriced at a level substantially beyond what the real estate professional recommends may develop a stigma. The market may look at the overpriced property now displaying reduction after reduction and ask what is wrong with that property that is causing all these price reductions.”
The San Francisco Chronicle in California. “After years of rapid growth, Bay Area rents continue to increase but are finally showing signs of a slowdown. Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, is noticing the slow growth. ‘Several years ago, we had year-over-year growth exceeding 10 percent, so [this is] sharp deceleration,’ Rosen said.”
“Rosen cites three main factors impacting prices. First, new supply is flooding the market, especially in Oakland and the Silicon Valley. Second, skyrocketing rents in the last decade mean the region has finally ‘reached a rent level that pushes against affordability ceiling for many households,’ he said. A substantial increase in ‘out-migration,’ with people and jobs leaving the region, is making the market less competitive. ‘This is caused by high cost of housing, much higher effective tax rates, because of the new tax law limiting state and local income tax deductions, and the general deterioration of quality of life,’ Rosen explained.”
“Chris Salviati, housing economist with Apartment List, agrees that the 2019 data reveals the Bay Area market has flattened and noted that the region’s allure as the best place in the country for jobs may be fading. ‘Even though the economy remains hot in the Bay Area, a lot of other cities in other areas of the country have started to thrive,’ Salviati said. ‘There are burgeoning tech scenes in other cities. If you wanted that high-salary tech job, the Bay Area was once the only place to come. Now, other places can offer similar opportunities at a lower cost of living. It has become less attractive. That inbound demand is cooling.’”
From KTRH in Texas. “With mortgage lenders relaxing some rules in recent years, there are fears of another housing bubble like we saw in 2008. So-called jumbo mortgages specifically, are loans that exceed the guarantees set by Fannie Mae and Freddie Mac.Some lenders offer up to $1 million with only 10 percent down if you have a FICO score of at least 760. Those who can put 30-40 percent down may receive up to $3 million. Others are accepting scores as low as 640, which was considered sub-prime a decade ago.”
“‘Conforming loan limits now are right at $500,000 in the Houston area, so anything that is above that is really who would be impacted. And that is really a very small percentage of the homes that are bought and sold in Houston, Texas,’ says Chris Nooney, certified mortgage planner for Goldwater Bank.”
“While banks are still on the hook for defaulted loans, Nooney says protections have been put in place since the housing crisis a decade ago. ‘That risk to the potential bank does increase if the underwriting criteria or underwriting guidelines become more lax where they will allow for lower down payments and higher amounts financed.’”
“Still, Nooney believes fears of a housing crisis are overblown. ‘We all tend to forget things that happen, especially the financial crisis, how soon we forget,’ he says. ‘When we’re reminded of something as serious, we all tend to take this frantic approach to what may happen.’”